Yesterday evening, Christopher Pincher reported to the Housing, Communities and Local Government Select Committee on the Government's plans to make sites of 40 or 50 homes exempt from Affordable Housing Section 106 agreements.
For context these agreements were responsible for 52% of Affordable Housing funding in 2019/20.
In responding to queries on whether the Government were intending to push ahead with the higher threshold Mr Pincher said: “Our view was that in the present crisis it’s better to have some building than none – we wanted to make sure SMEs (Small and medium-sized enterprises) can build on smaller plots of land. They can often build out much more quickly and effectively"
He stated that “We will have to keep that increase under review. We have committed to do that to see the effect it has on affordable homes.... But it is much more sensible to temporarily change the system so that homes are built rather than none at all.”
In our experience, affordable housing requirements are rarely a barrier to development. In situations where scheme finances are stretched, viability assessments, when used correctly, can ensure the optimum level of provision is provided in order that development is not stymied. We, therefore, remain hopeful this policy position will not be pursued further.
To further illustrate the potential impact of this increased threshold; Local Government Association research found this would have led to 30,000 fewer affordable homes being built over the past 5 years.
Mr Pincher also said the government’s plan to replace Section 106 and Community Infrastructure Levy (CIL) charges with a national Infrastructure Levy “should accrue more funds to the local exchequer which should in turn mean more infrastructure including affordable homes can be built”.
It remains to be seen if this national levy based on a tax of the final development value will aid the provision of affordable housing. In our view, a key consideration will be the impact of the liability moving from commencement of construction to completion of development which has the potential to result in Local Authorities facing a greater financial burden. The flip side is that it should improve developer cash flow and thus the available surplus for affordable housing provision.
Government figures published today reveal that 57,644 affordable homes were delivered in the 12 months to 31 March 2020 . Affordable housing therefore represented 23% of total new additions to the country’s housing stock in 2019/20. Of these, 6,566 were for social rent up 4% on the 6,338 completed in the previous year.
Councils built 6,531 affordable homes in 2019/20 – 11% of the total and the highest recorded figure since 1991/92. 52% of all the affordable housing delivery was, however, funded by Section 106 planning agreements which may be worrying considering the Government plans to scrap Section 106 as a mechanism to provide Affordable Housing.
Delivery of affordable rent fell for the first time since 2015/16 with 27,378 completions, down 5% from 28,938 in 2018/19.
Shared ownership completions also climbed, up 6% from 17,021 in 2018/19 to 17,998 last year.
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